Answers to Gas and Slippage assignment

Gas_and_Fees_Ishioma Sandra Ojunekwu.md

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+1. What is Gas?
+
+   Gas is a unit that measures the amount of computational effort required to perform operations on the Ethereum network, such as sending ETH, deploying smart contracts, or interacting with decentralized applications (dApps). It acts like fuel — without gas, transactions cannot be processed.
+
+   Gas serves three main purposes:
+   - It prevents spam on the network by requiring users to pay for computation.
+   - It compensates validators (or miners, before Ethereum switched to Proof of Stake) for processing and verifying transactions.
+   - It allows users to prioritize transactions by paying higher fees for faster confirmation.
+
+   EIP-1559 (Ethereum Improvement Proposal 1559) was introduced in August 2021 to improve the gas fee system. Before EIP-1559, users had to guess a proper gas price and compete in a bidding war, leading to high fees and unpredictable costs.
+
+   EIP-1559 introduced a new fee structure:
+   - A base fee is now automatically calculated by the network depending on congestion. This fee is burned, reducing ETH supply over time.
+   - Users can also add a priority tip to incentivize validators to include their transaction faster.
+   - This change made gas fees more predictable and transparent, and also introduced a deflationary mechanism by burning the base fee.
+
+  2. What is slippage and how does it relate to gas prices?
+
+   Slippage is the difference between the expected and actual price of a trade, often seen during token swaps on platforms like Uniswap.
+
+   It happens when prices change before the transaction is confirmed, especially during high-demand blocks. If gas fees are low, the transaction may be delayed, increasing the chance of slippage. Higher gas fees help transactions go through faster and reduce slippage risk.